Maintaining Your Tax Records

It’s important to keep your tax records in order just in case you need to find them throughout the year for any reason, as well as tax time. When you organize your documents regularly it will save you a lot of time and stress during the tax season. You will be less likely to miss out on important deductions or have unsubstantiated items disallowed in the event of an audit.

Usually, your tax returns can be audited up to three years after filing. However, if income is underreported more than 25%, the IRS can collect underpaid taxes up to six years later. So, keeping good records means you'll always be able to verify what you report on your tax return. Hang on to your tax records for seven years.

While you organizing all those documents and receipts you should also consider a midyear tax review. Most people don't include tax planning on their summertime agenda, but there are benefits to doing so. The problem with waiting until the end of the year is that you reduce the time for planning strategies to take effect. If you take the time now to schedule a midyear tax planning review, you will have eight months for your actions to make a difference on your 2017 tax return. In addition, proposed tax reform could be cause for additional changes to your tax plan. Planning now for 2017 taxes not only helps reduce your taxes, but it may help you gain control of your entire financial situation.

At Summit CPA we offer multiple resources to assist you with all of your tax and financial planning needs. Contact our office at (260)-497-9761 to schedule an appointment with our advisors.